Getting real about e-waste: new consultation paper on product stewardship

05 Apr 2011

Getting real about e-waste: new consultation paper on product stewardship

by Claire Smith, Rebecca Hawke

A national co-regulatory product stewardship scheme that extends manufacturer or importer responsibility to the end of life of computers and televisions could be in place as early as the final quarter of this year.

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The Australian Government is getting real about tackling growing e-waste mounds. A national co-regulatory product stewardship scheme that extends manufacturer or importer responsibility to the end of life of computers and televisions could be in place as early as the final quarter of this year.

The proposed national take-back scheme for televisions and computers, called the National Television and Computer Product Stewardship Scheme (E-Waste Scheme) sets aggressive targets which aim to lift recycling rates for televisions, computers and computer peripherals from 10% to 80% by 2021. This will affect importers and manufacturers as well as e-waste recyclers, local councils and other e-waste service providers. A consultation paper on E-Waste Scheme regulations is open for comment until 8 April 2011.

Product stewardship legislation framework

The Product Stewardship Bill introduced into Federal Parliament on 23 March 2011 sets out a national legislative framework:

requiring liable parties to be members of an approved "Arrangement", that is, a set of measures that are implemented in order to meet the product stewardship obligations and requirements of that liable party or group;

providing enforcement provisions and powers to the Regulator to assess and approve product stewardship Arrangements and monitor and enforce compliance by liable parties and Administrators of Arrangements; and

providing parties with the right to appeal specified decisions.

The detail of product-specific schemes such as the proposed E-Waste Scheme will be contained in the underlying regulations which may be made under voluntary, co-regulatory or mandatory provisions of the Product Stewardship Act (when passed).

A co-regulatory approach involves a mandatory requirement for liable entities to join product stewardship schemes and the use of Government regulation to set outcomes and consistent requirements and targets for those schemes. Liable entities will, however, have some flexibility in how those outcomes, requirements and targets are met.

Under a mandatory approach, regulations will be more prescriptive than the co-regulatory approach and dictate both the outcome/requirement and how that will be met.

E-Waste Scheme regulations Consultation Paper

The first set of regulations (to be made under the co-regulatory provisions of the Product Stewardship Act if passed) will set up the E-Waste Scheme for collecting and recycling televisions, computers and computer peripherals.

The Department of Sustainability, Environment, Water, Population and Communities (SEWPaC) released the National Television and Computer Product Stewardship Scheme Consultation Paper on these proposed regulations on 8 March 2011 requesting responses on a range of issues including:

which television and computer products should be covered;

what is the appropriate point of liability and threshold above which participation in the E-Waste Scheme is required;

what importation data should be used and over what period;

the approach for setting enforceable collection-for-recycling targets; and

matters to be considered by the Regulator when assessing new Arrangements for approval and changes to those Arrangements.

We consider some of these key questions below.

1. What products are covered by the E-Waste Scheme?

Televisions, computers and computer peripherals only at this stage. Definitions set out in the Regulations will be linked to Customs tariff codes to provide clarity for liable parties. Mobile phones are not included (as the MobileMuster program is already running). Schemes for other suitable products may be set up at a later stage under separate regulations.

2. Who will have liability/responsibility under the proposed E-Waste Scheme?

Importers and domestic manufacturers (if any) of televisions, computers and computer peripherals sold in Australia above a certain threshold (discussed below) who are "constitutional corporations". Primary liability does not fall on retailers or consumers.

3. What is the proposed threshold for participation?

A threshold of 5,000 units has been suggested based on 2008 Customs importation data (although whether the threshold will be set by reference to units or weight of e-waste is still open – see response to question 5). This threshold is intended to protect small business by capturing 95.3% of total units sold in Australia but excluding 95.5% of importers. The threshold will be set on the liable party's previous financial year units as recorded in Customs importation data.

Expect to see anti-avoidance mechanisms in the Regulations so that a company cannot split up to form multiple companies under the threshold. Stakeholders can comment on whether a 5,000 unit threshold is appropriate.

4. How will Arrangements under the E-Waste Scheme operate?

Liable entities will meet their obligations by becoming a member of an approved co-regulatory product stewardship "Arrangement" for the collection and recycling of end-of-life television and computer products.

An Arrangement is a set of activities or measures taken to achieve the outcomes and requirements specified in the Regulations. The Arrangement may be multi-member, or a liable party may develop and implement its own Arrangement. Each Arrangement will need to be approved by the Regulator and will need to nominate an Arrangement Administrator – the entity responsible for administering the Arrangement on behalf of member liable parties. Approved Arrangements would be reviewed every five years.

The E-Waste Schemes is flexible enough to allow collection in a variety of different ways which may include local drop-off points, kerbside collection, return by mail, or return to a store selling computers or televisions. Events for collection or drop-off might be on demand or scheduled, frequent or annual depending on the Arrangement, coverage, location (ie. metropolitan vs rural) etc.

Product Stewardship Australia and the Australian Information Industry Association are proposing to set up a national Arrangement and are seeking input from SEWPaC and interested stakeholders about the design and implementation of their scheme.

5. What approach will be used to set an enforceable collection-for-recycling target and what will those targets be?

A target is an enforceable minimum performance outcome required under the E-Waste Scheme. Targets may be based on a minimum number of units or may be weight-based. The difficulty is that while Customs importation data (which SEWPaC is currently using to estimate which importers will be potentially liable) uses units, the Australian waste industry has traditionally dealt with weight of waste that is recycling or disposed of. The consultation paper calls for comments by stakeholders.

There will be overarching E-Waste Scheme targets and a proportion of these will be allocated to each approved Arrangement. The collective E-Waste Scheme targets will focus on the collection of waste television and computer products for recycling and will increase on a year to year basis until they reach 80% of waste televisions and computers in 2020-2021.

6. Will the E-Waste Scheme require liable parties to collect their own waste?

No. Arrangements will be required to accept any brand of the relevant product, not just products imported or manufactured by their members. This is designed to deal with issues associated with orphan and legacy waste (ie. from an importer or manufacturer who no longer exists or operates in Australia).

7. Who will bear the cost of the E-Waste Scheme?

The Government's intention is that the E-Waste Scheme will avoid additional cost to consumers at the end of the product's life. Industry will cover the cost of implementing the Scheme, including collection, infrastructure, recycling, awareness and education programs and governance activities. It is likely, however, that these costs will be built into the purchase price of the product or absorbed by manufacturers/importers.

8. Reporting

It is suggested that annual reporting requirements will include:

membership and administration of the approved Arrangement;

handling of covered products;

performance against enforceable targets;

amount of products collected from metropolitan, regional and remote areas;

destination of collected products for recycling and reuse;

amount of material recovered and flows to landfill following recycling;

products held in storage;

cost of arrangement; and

changes regarding service providers.

9. What are the penalties for non-compliance with the E-Waste Scheme?

The Product Stewardship Bill contains civil penalties, enforceable undertakings and infringement notice provisions. If a liable party fails to join an approved co-regulatory Arrangement, it will be in breach of a civil penalty provision. Before bringing proceedings, it is intended that the Regulator will provide a notice requiring the liable party to join an Arrangement within a specified period. If that does not happen the Regulator may bring civil penalty proceedings. The proposed civil penalty is $22,000, with a proposed maximum penalty of $110,000 plus 10% for each day that the offence continues.

The Regulator may accept a written undertaking as an alternative to civil penalty proceedings or prosecution. The undertaking may require the liable party to take specified action to comply with the E-Waste Scheme or refrain from certain actions. The undertakings may be enforced and a court may order the party in breach of an undertaking to pay an amount corresponding to any amount of financial benefit attributable to the breach of the undertaking.

If the Arrangement's Administrator has failed to take all reasonable steps to comply with the Regulations, it is intended that the Regulator will have the power to provide an informal warning, issue an improvement notice or, if necessary, cancel the Arrangement's approval.

10. Who regulates the E-Waste Scheme?

The E-Waste Scheme will be regulated by the Minister of SEWPaC.

11. When will the E-Waste Scheme commence?

Subject to passage of the Bill and the regulations, it is intended that the E-Waste Scheme will commence on or around September 2011.

Implications for local governments and current e-waste recyclers

Although liability under the E-Waste Scheme will rest on importers and domestic manufacturers, the Scheme will have wide flow-on effects because waste is regulated at all levels of government – federal, state and local – and both governments and the private sector are already participating voluntarily in the e-waste recycling sector.

Arrangement Administrators may seek to engage with local councils and e-waste service providers in order to:

co-locate collection sites at existing waste facilities;

purchase end-of-life products collected independently; or

negotiate service contracts to operate collection sites and recycling facilities on an Arrangement's behalf.

Councils and e-waste service providers will need to consider how to integrate their current e-waste recycling arrangements with the new legislation. For example, many councils currently charge for their e-waste recycling service but as the purpose of the E-Waste Scheme is not to charge consumers at end-of-life of the product, televisions and computers which consumers have paid a council to recycle will not be suitable for inclusion in the E-Waste Scheme and an Arrangement Administrator would not be able to purchase those products from the council. A transitional arrangement for new entrants would be one way to deal with existing stockpiles of televisions and computers which consumers have paid to deposit at local councils.

While the transition from voluntary to mandatory recycling regimes may present teething problems, for e-waste recycling service providers it also presents new opportunities by significantly expanding the demand for their services.

The National Television and Computer Product Stewardship Scheme Implementation Working Group has received approval from Standards Australia to establish an Australian Standard for the collection, storage, handling, transport and treatment of e-waste. This will inform e-waste service providers as to some of the standards they will be required to meet in order to contract with an approved e-waste Arrangement.

The Draft Interim Industry Standard released on 23 September 2010 requires e-waste to be collected at no cost to the public as well as setting draft standards for recyclers in relation to certification, goods receiving and storage, processing and handling, traceability, data security and destruction and downstream processes.

E-waste service providers will need to ensure that they can meet Arrangement requirements and relevant standards for recycling.

Implications for liable entities

Liable entities will need to decide whether to set up their own Arrangement or contract with an established multi-party Arrangement and how to pass through their additional regulatory costs. In the latter case, entities will need to carefully consider any contract they enter into with the multi-party Arrangement together with the ability of the multi-party Arrangement to fulfil the E-Waste Scheme obligations and what happens in the event that the Arrangement is wound up or its licence is cancelled.

The European experience

Mandatory recycling of e-waste is a new venture in Australia but similar schemes have been operating overseas for almost a decade.

In the European Union, the Waste Electrical and Electronic Equipment Directive makes manufacturers financially responsible for the collection, treatment and recovery of waste electrical equipment and obliges distributers to allow consumers to return their e-waste free of charge.

Despite rules on collection and recycling of e-waste in Europe for the better part of a decade, the rate of recycling is currently only about 33%. A target of 45% over 4 years, eventually rising to 65% is considered achievable.

Considering the European experience, it is questionable whether Australia's target of 80% recycling of e-waste by 2020-2021 is too ambitious given the lack of existing recycling facilities.

The timetable for reform here: What should you do?

The Australian Government has an aggressive timetable for implementing the E-Waste Scheme. The deadline for submissions on the E-Waste consultation paper is 8 April 2011.

The Government's aim is to pass the Product Stewardship Bill quickly through Parliament, ideally by 1 July 2011. The E-Waste regulations will then be introduced with a view to having the Scheme up and running in the final quarter of 2011. Stakeholders therefore have a limited time to comment.

Claire Smith has international experience in dealing with legal risk issues arising out of e-waste regulation including co-regulatory extended producer responsibility schemes in the UK and Europe. We are happy to advise you on further implications arising from the proposed new legislation and assist with any submissions on the E-Waste Scheme.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.